ML103200198

U.S. Department of Transportation Maritime Administration - Response to Revised Power Reactor Security Rule

ML103200198
Person / Time
Site:	NS Savannah
Issue date:	11/08/2010
From:	Koehler E US Dept of Transportation, Maritime Admin
To:	Document Control Desk, NRC/FSME
References
Download: ML103200198 (16)

Text

U.S. Department of SAVANNAH Technical Staff 1200 New Jersey Ave., SE Transportation Office of Ship Disposal Washington, DC 20590 Maritime Administration Ref: 10 CFR 50.12, 50.54(p), 73.5 & 73.55 November 8, 2010 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555

SUBJECT:

Docket No. 50-238; License No. NS-1; N.S. SAVANNAH Response to Revised Power Reactor Security Rule

References:

(a) Letter from U.S. Nuclear Regulatory Commission to Mr. Erhard W. Koehler (MARAD), dated August 2, 2010, N.S. SAVANNAH - Revised Power Reactor Security Rule (b) Public Webinar to Discuss the Applicability of 10 CFR 73.55 Requirements to Part 50 Licensees with Facilities in Decommissioning or Decommissioned Status, dated July 20, 2010 (c) N.S. SAVANNAH Updated Final Safety Analysis Report, Revision 4 References (a) and (b) discuss that Part 50 licensees with facilities in decommissioning or decommissioned status may be out of compliance with the current 10 CFR 73.55 security requirements.

The revised Power Reactor Security Rule (74 Federal Register (FR) 13926) became effective on May 26, 2009, with compliance required by March 31, 2010.

Reference (a) states that licensees need to evaluate the applicability of the current 10 CFR 73.55 to their specific facilities and either make appropriate changes to their Physical Security Plans or apply for exemptions, as necessary. The Maritime Administration (MARAD) has evaluated the current 10 CFR 73.55 and determined that an exemption from 10 CFR Part 73 is appropriate. In addition, MARAD has also determined that special circumstances exist that make an exemption from 10 CFR 50.54(p) appropriate. Pursuant to 10 CFR 73.5 and 10 CFR 50.12, MARAD requests exemption from 10 CFR Part 73 and 10 CFR 50.5 4 (p). Enclosure 1 is the request for exemption.

A license change is not required. The N.S. SAVANNAH (NSS) possession-only license contains no license condition requiring Nuclear Regulatory Commission (NRC)-approved plans for physical security, training and qualification or safeguards contingency. In addition, the license contains no license condition that specifically addresses 10 CFR Part 70 because MARAD neither possesses nor holds title to any special nuclear material associated with the NSS. Similarly, the license contains no license condition that specifically addresses 10 CFR Part 40'because MARAD neither possesses nor holds title to any regulated quantity of source material associated with the NSS.

Regarding compliance, Reference (a) states:

The NRC believes that there are currently no security or health and safety gaps at these facilities that may not be in compliance with the current 10 CFR 73.55

Docket No. 50-238; License NS-1; N.S. SAVANNAH Response to Revised Power Reactor Security Rule November 8, 2010 requirements. This is because the security programs at these facilities meet the baseline requirements of the previous version of 10 CFR 73.55 and also meet-.-

the requirements in subsequent security orders..

MARAD agrees there are no security or health and safety gaps at NSS. Recall that NSS was defueled in Fall 1971. The ship's hull defines the licensed site boundary. Therefore, defueling the ship's power plant and moving the fuel off of the ship equates to removing the fuel from the licensed site. The fuel was stored at the MARAD Refueling Facility, Todd Shipyards, Galveston, Texas. As noted in Reference (c),

on November 3, 1972, all 36 Core I spent fuel elements were transferred back to the Atomic Energy Commission (AEC) for reprocessing in South Carolina.

When 10 CFR Part 73.55 was promulgated on February 24, 1977, MARAD interpreted that 10 CFR Part 73 was not applicable to NSS based on the fact that 1) the 1976 issued NSS License was a possession-only license that did not allow operation and 2) the introductory sentence of the 1977 rule states "Each licensee who is authorized on February 24, 1977, to operate a nuclear reactor pursuant to Part 50 ... " (42FR10838). As a result of not being authorized to operate, MARAD determined it had no obligation to implement the rule. Therefore, for the NSS, MARAD has no baseline requirements of previous versions of 10 CFR 73.55 nor any other requirement of 10 CFR Part 73.

Reference (a) notes that For facilities which may not be in compliance with the current 10 CFR 73.55, the NRC will consider, as appropriate on a case-by-case basis, the use of enforcement discretion in accordance with Section VII.B.6 of the Enforcement Policy, "Violations Involving Special Circumstances" for a period of time until the exemption process is completed. The NRC will consider a licensee's demonstration of good-faith attempt to interpret and implement the new rule, the, licensee's prompt corrective actions, and the NRC's recognition of ambiguity regarding the scope of the rule when applying this discretion.

Enclosure 2 describes how MARAD in good faith interpreted the 10 CFR Part 73 as not applying to the NSS. Following issuance of the possession-only license, MARAD understood the NSS fully met AEC and NRC expectations regarding security by implementing the security requirements of the NSS Technical Specificationswhich were derived from Regulatory Guide 1.86, "Termination of Operating Licenses for Nuclear Reactors." These guidelines define the security methods for a possession-only licensee.

This submittal contains no new Regulatory Commitments.

If there are any questions or concerns with any issue discussed in this report, please contact me at

\(202) 366-2631, and/or e-mail me at erhard.koehler@dot.gov..

Respectfully, Erhard W. Koehler Senior Technical Advisor, N.S. SAVANNAH Office of Ship Disposal 2

Docket No. 50-238; License NS-1; N.S. SAVANNAH Response to Revised Power Reactor Security Rule November 8, 2010 Enclosures 3

Docket No. 50-238; License NS-1; N.S. SAVANNAH Response to Revised Power Reactor Security Rule November 8, 2010 Enclosures

1. Request for Exemption from 10 CFR Part 73 and 10 CFR 50.54(p)

2. MARAD's Interpretation of the Applicability of 10 CFR PART 73 to the NSS

3. List of Regulatory Commitments 4

Docket No. 50-238; License NS-1; N.S. SAVANNAH Response to Revised Power Reactor Security Rule November 8, 2010 cc:

Electronic copy NSS ESC NSS SRC MAR 610, 612, 615 Hardcopy, cover letter only MAR-600, 640, 640.2 Hardcopy w/ all enclosures MAR-100, 640.2 (rf)

USNRC (John T. Buckley, Mark C. Roberts)

USNRC Regional Administrator - NRC Region I MD Department of the Environment (Roland G. Fletcher; George S. Abum, Jr.)

NC Department of Environment & Natural Resources (Beverly 0. Hall)

SC Department of Health & Environmental Control (Susan E. Jenkins; Aaron Gantt)

VA Department of Emergency Management (Michael M. Cline)

VA Department of Health (Leslie P. Foldesi)

EWK/jmo 5

aw-U.S. Department of Transportation Savannah Technical Staff Office of Ship Disposal 1200 New Jersey Ave., SE Washington, DC 20590 Maritime Administration Docket No. 50-238; License No. NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule REQUEST FOR EXEMPTION FROM 10 CFR PART 73 AND 10 CFR 50.54(P) 6

Docket No. 50-238; License NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule Request for Exemption from 10 CFR Part 73 and 10 CFR 50.54(p)

November 8, 2010 Request for Exemption Pursuant to 10 CFR 73.5 and 10 CFR 50.12, MARAD requests permanent exemptions from security requirements 10 CFR Part 73 and 10 CFR 50.54(p).

10 CFR Part 73 "prescribes requirements for the establishment and maintenance of a physical protection system which will have capabilities for the protection of special nuclear material at fixed sites ... and

[protection] of plants in which special nuclear material is used."

10 CFR 50.54(p) prescribes as a condition of the license the requirements for safeguards contingency plan procedures.

1. Background

MARAD is owner and licensee of NSS, the world's first nuclear powered merchant ship. Conceived in the 1950's as part of President Eisenhower's "Atoms for Peace" program, the NSS was designed, constructed and operated as a joint research and development project of the MARAD and the Atomic Energy Commission (AEC). MARAD contributed the ship while the AEC contributed the reactor, nuclear fuel and related nuclear systems. NSS was operated in experimental and commercial demonstration service throughout the 1960's.

The ship was removed from service in 1970. In August 1971, the reactor was defueled. The fuel was stored in a "spent fuel pool" inside MARAD's Refueling Facility, located at the Todd Shipyard in Galveston, Texas. The refueling facility was licensed by the state of Texas under an agreement with the AEC. On November 3, 1972, all 36 Core I spent fuel elements were returned to the AEC and transferred by the AEC for reprocessing at its Savannah River Site in South Carolina.

On May 19, 1976, the operating license for the NSS was amended to a possession-only license.

On March 28, 1977, a new 10 CFR 73.55 was added and became effective (42FR10838). If a licensee was authorized to operate on February 24, 1977, then they were required to submit an amended physical security plan by May 25, 1977. For the NSS, MARAD neither submitted the amended security plan nor requested an exemption from the new rule. The apparent rationale was 10 CFR 73.55 applied to plants authorized to operate and NSS was no longer allowed to operate. As changes were made to 10 CFR Part 73 and 10 CFR 73.55 over the following years, MARAD similarly interpreted that if the original rule did not apply, then subsequent changes to the rule, which did not change the applicability of the rule, did not apply to NSS.

The rule was most recently revised on May 26, 2009 with compliance required by March 31, 2010. In the Statements of Consideration for this rulemaking at 74 Fed. Reg. 13,936, the NRC clearly stated that receipt of special nuclear material triggers the requirement to implement the physical security program.

However, consistent with previous 10 CFR Part 73 rulemakings, no statement defined when the rule no longer applied. During the webinar (Reference (a)), the NRC stated an expectation that an exemption request (?) is required for the NRC to conclude when 10 CFR Part 73 no longer applies to a licensee. In a follow-on letter (Reference (b)) the NRC stated they expected a licensee to request exemptions from those requirements in 10 CFR 73.55 that the licensee believed were not applicable to their facility.

2. Technical Evaluation The following technical considerations are relevant to the requested exemption:

o After Fall 1971, the NSS was defueled and modified to be inoperable by disabling the Control Rod Drive (CRD) system and removing the Reactor Coolant Pump motors and impellers.

7

Docket No. 50-238; License NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule Request for Exemption from 10 CFR Part 73 and 10 CFR 50. 5 4 (p)

November 8, 2010 o By the end of 1972, all spent fuel had been returned to the AEC for reprocessing.

o The ship's hull defines the licensed site. Therefore, removing the spent Core I fuel from the ship equates to removing all special nuclear material from the NRC licensed site.

In 1977, 10 CFR 73.55 applied to operating plants, and the NSS reactor could not be operated. The present 10 CFR Part 73 applies when special nuclear material is used on the licensed site (10 CFR Part 73.1(a)). MARAD has had no special nuclear material on the licensed NSS sitesince 1971.

Because MARAD neither possesses nor uses special nuclear material on the licensed site, no part of.this exemption request will reduce margins of safety in the NSS security requirements applicable to protection of special nuclear material. The current security requirements have been included in the Technical Specifications since the possession-only license was issued in 1976 (Reference (c)). These requirements were derived from Regulatory Guide (RG) 1.86 (Reference (d)). These security guidelines are consistent with the level of security required by a byproduct material licensee (10 CFR Part 30 "Rules of General Applicability to Domestic Licensing of Byproduct Material,") to protect the public health and safety. The acceptable security methods of RG 1.86 are listed in Enclosure 2.

3. Regulatory Evaluation

a. Current Regulatory Status In Reference d, the AEC states, "Surveillance and commensurate security should be provided to assure that the public health and safety are not endangered." The Regulatory Guide continues by defining seven actions a licensee should take to assure public health and safety.

The least prescriptive alternative for reactor retirement is Mothballing. It allows the facility to remain ...

intact except that all fuel assemblies and the radioactive fluids and waste should be removed from the site. Adequate radiation monitoring, environmental surveillance, and appropriate security procedures should be established under a possession-only license to ensure that the health and safety of the public is not endangered.

The NSS is currently in the Mothballed condition. MARAD removed all fuel assemblies from the licensed site in 1971. Appropriate security procedures to ensure that the health and safety of the public have been established for the possession-only license since 1976.

b. 10 CFR Part 73 Exemption Request Evaluation The security requirements of 10 CFR Part 73, as applicable to a 10 CFR Part 50 licensed site, presume that the purpose of the facility is to possess and use special nuclear material.

The specific requirements for granting exemptions to 10 CFR Part 73 licensing requirements are set forth in 10 CFR 73.5, Specific Exemptions:

The Commission may, upon application of any interested person or upon its own initiative, grant such exemptions from the requirements of the regulations.in this part as it determines are authorized by law and will not endanger life or property or the common defense and security, and are otherwise in the public interest.

MARAD has qualitatively evaluated and determined the exemption criteria are satisfied based on the following: 1) there is no special nuclear material on the licensed site and 2) MARAD has implemented the security guidelines of Regulatory Guide 1.86 for a mothballed facility.

8

Docket No. 50-238; License NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule Request for Exemption from 10 CFR Part 73 and 10 CFR 50.54(p)

November 8, 2010

c. 10 CFR Part 50.54(p) Exemption Request Evaluation Various aspects of a licensee's 10 CFR Part 73 security program are required to be implemented in 10 CFR 50.54(p). This regulation states in part:

The licensee shall prepare and maintain safeguards contingency plan procedures in accordance with appendix C of part 73 of this chapter for effecting the actions and decisions contained in the Responsibility Matrix of the safeguards contingency plan...[and]...the licensee shall have: ... detailed procedures developed according to Appendix C to Part 73 available at the licensee's site ...

The specific requirements for granting exemptions to 10 CFR Part 50 licensing requirements are set forth in 10CFR 50.12, Specific Exemptions, as follows:

(a) The Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of the regulations of this part, which are--

(1) Authorized by law, will not present an undue risk to the public health and safety, and are consistent with the common defense and security.

(2) The Commission will not consider granting an exemption unless special circumstances are present. Special circumstances are present whenever--

(i) Application of the regulation in the particular circumstances conflicts with other rules or requirements of the Commission; or (ii) Application of the regulation in the particular circumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule; or (iii) Compliance would result in undue hardship or other costs that are significantly in excess of those contemplated when the regulation was adopted, or that are significantly in excess of those incurred by others similarly situated; or (iv) The exemption would result in benefit to the public health and safety that compensates for any decrease in safety that may result from the grant of the exemption; or (v) The exemption would provide only temporary relief from the applicable regulation and the licensee or applicant has made good faith efforts to comply with the regulation; or (vi) There is present any other material circumstance not considered when the regulation was adopted for which it would be in the public interest to grant an exemption. If such condition is relied on exclusively for satisfying paragraph (a)(2) of this section, the exemption may not be granted until the Executive Director for Operations has consulted with the Conmmission.

The following special circumstance applies:

10 CFR 50.12(a)(2)(ii) - Application of the regulation in the particular circumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule.

The underlying purpose of 10 CFR Part 73 is to ensure the licensee can protect special nuclear material and the facility in which it is being used. The underlying purpose of 10 CFR Part 50.54(p) is to develop and maintain documents that implement 10 CFR Part 73.

9

Docket No. 50-238; License NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule Request for Exemption from 10 CFR Part 73 and 10 CFR 50.54(p)

November 8, 2010 When the special nuclear material was removed from the site in 1971, the application of the 10 CFR Part 73 requirements to the NSS is not and has not been necessary to achieve its underlying purpose, to prevent radiological sabotage or diversion of special nuclear material.

Therefore, it follows that the application of 10 CFR 50.5 4 (p) is not and has not been necessary to achieve its underlying purpose.

MARAD has qualitatively evaluated and determined the exemption criteria are satisfied based on the following: 1) there is no special nuclear material on the licensed site and 2) a special circumstance applies - the application of 10 CFR Part 73 requirements and 10 CFR 50.54(p) are not necessary to achieve their underlying purpose.

4. Precedent In Reference (e), NRC granted a similar exemption request. Sacramento Municipal Utility District proposed a change to eliminate the Rancho Seco security plan requirements pursuant to 10 CFR Part 73 and 10 CFR 50.54(p) upon successful transfer of the spent nuclear fuel that was stored in the reactor spent fuel pool to an Independent Spent Fuel Storage Installation (ISFSI). The NRC staff concluded that the exemption requests were acceptable since the spent nuclear fuel had been removed from the 10 CFR Part 50 site.

In Reference (f), NRC granted a similar exemption request. Pacific Gas and Electric Company proposed a change to eliminate the Humboldt Bay Power Plant security plan requirements pursuant to 10 CFR Part 73 and 10 CFR 50.54(p) following successful transfer of the spent nuclear fuel assemblies and fuel fragment containers (spent fuel) from the Spent Fuel Pool (SFP) to the Humboldt Bay ISFSI.

The NRC staff concluded that the exemption requests were acceptable since the spent nuclear fuel had been removed from the 10 CFR Part 50 site.

These precedents are applicable to the NSS. Similar to these situations, when the NSS power plant was defueled in Fall 1971, MARAD removed the spent fuel from the' 10 CFR Part 50 site.

5. Conclusion and Summary In conclusion, MARAD requests an exemption from the requirements of 10 CFR 50.54(p) and 10 CFR Part 73. The basis for the request is MARAD removed the spent fuel from NSS in Fall 1971; therefore application of the regulation would not serve the underlying purpose. MARAD requests these exemptions for the remaining life of the license.

10 CFR 73.5 states the Commission may, upon application of any interested person or upon its own initiative, grant such exemptions from the requirements of the regulations in this part as it determines are authorized by law and will not endanger life or property or the common defense and security, and are otherwise in the public interest.

MARAD's evaluation has determined the requested exemption is authorized by law, will not endanger life or property, will not endanger the common defense and security, and is otherwise in the public interest.

10 CFR 50.12(a) states, the Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of 10 CFR Part 50 when (1) the exemptions are authorized by law, will not present an undue risk to public health or safety, and are consistent with the common defense and security; and (2) when special circumstances are present.

MARAD's evaluation has determined the requested exemption is clearly authorized by law and is consistent with the common defense and security. In addition, MARAD believes that this request meets the criteria established by the NRC staff for satisfying one special circumstance -

10

Docket No. 50-238; License NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule Request for Exemption from 10 CFR Part 73 and 10 CFR 50.54(p)

November 8, 2010 underlying purpose - as detailed in this enclosure and therefore, will not present an undue risk to public health or safety.

6. References (a) Public Webinar to Discuss the Applicability of 10 CFR 73.55 Requirements to Part 50 Licensees with Facilities in Decommissioning or Decommissioned Status, dated July 20, 2010 (b) Letter from U.S. Nuclear Regulatory Commission to Mr. Erhard W. Koehler (MARAD), dated August 2, 2010, N.S. Savannah - Revised Power Reactor Security Rule (c) Letter from Mr. Robert W. Reid (NRC) to U.S. Department of Commerce, Maritime Administration, dated May 19, 1976, No Title [Issuance of Amendment 8, Possession-only License]

(d) Regulatory Guide 1.86, Termination Of Operating Licenses for Nuclear Reactors, June 1974 (e) Letter from U.S. Nuclear Regulatory Commission to Mr. Steve J. Redeker (SMUD), dated October 10, 2002, Ranch6 Seco Nuclear Generating Station - Issuance of Amendment and Exemption from Requirements of 10 CFR Part 50 Security Requirements (TAC No. MB 1323)

(f) Letter from U.S. Nuclear Regulatory Commission to Mr. John T. Conway (PG&E), dated June 16, 2008, Humboldt Bay Power Plant Unit 3 - Issuance of Amendment and Exemption From Requirements of 10 CFR Part 50 and 10 CFR Part 73 Security Requirements (TAC No. J00337) 11

U.S. Department of Savannah Technical Staff 1200 New Jersey Ave., SE Transportation Office of Ship Disposal Washington, DC 20590 Maritime Administration Docket No. 50-238; License No. NS-1; N.S. SA VANNAH to Response to Revised Power Reactor Security Rule MARAD's INTERPRETATION OF THE APPLICABILITY OF 10 CFR PART 73 TO NSS 12

Docket 50-238; License No. NS-1; N.S. Savannah to Response to Revised Power Reactor Security Rule MARAD's Interpretation of the Applicability of 10 CFR PART 73 to the NSS November 8, 2010 MARAD's Interpretation of the Applicability of 10 CFR PART 73 to the NSS The following is an explanation of how MARAD, in good faith, interpreted that the 10 CFR Part 73 requirements have never applied to the NSS.

After the NSS Possession-only license was issued in May 1976, MARAD interpreted that the security requirement of the NS S Technical Specifications defined the widest spectrum of security requirements.

These requirements were derived from Regulatory Guide (RG) 1.86, "Termination of Operating Licenses for Nuclear Reactors". The RG describes methods and procedures considered acceptable by the AEC and NRC. The current version of the RG was promulgated in 1974 and remains in effect today.

The RG 1.86 states:

A licensee having a possession-only license must retain, with the Part 50 license, authorization for special nuclear material (10 CFR Part 70, "Special Nuclear Material"), byproduct material (10 CFR Part 30, "Rules of General Applicability to Licensing of Byproduct Material"), and source material (10 CFR Part 40, "Licensing of Source Material"), until the fuel, radioactive components, and sources are removed from the facility.

The NSS possession-only license only contains requirements for byproduct material. When the possession-only license was issued, no special nuclear material or source material was present on the NSS 10 CFR Part 50 licensed site. The ship's hull defines the licensed site.

The RG states that "Surveillance and commensurate security should be provided to assure that the public health and safety are not endangered." The RG lists the following as acceptable security methods for a possession-only license:

" Physical security to prevent inadvertent exposure of personnel should be provided by multiple locked barriers. The presence of these barriers should make it extremely difficult for an unauthorized person to gain access to areas where radiation or contamination levels exceed those specified in Regulatory Position C.4.

• To prevent inadvertent exposure, radiation areas above 5 mR/hr, such as near the activated primary system of a power plant, should be appropriately marked and should not be accessible except by cutting of welded closures or the disassembly and removal of substantial structures and/or shielding material.

" Means such as a remote-readout intrusion alarm system should be provided to indicate to designated personnel when a physical barrier is penetrated. Security personnel that provide access control to the facility may be used instead of the physical barriers and the intrusion alarm systems.

" The physical barriers to unauthorized entrance into the facility, e.g., fences, buildings, welded doors, and access openings, should be inspected at least quarterly to assure that these barriers have not deteriorated and that locks and locking apparatus are intact.

" A site representative should be designated to be responsible for controlling authorized access into and movement within the facility.

" Administrative procedures should be established for the notification and reporting of abnormal occurrences such as (1) the entrance of an unauthorized person or persons into the facility and (2) a significant change in the radiation or contamination levels in the facility or the offsite environment.

Records or logs relative to the inspections of the physical barriers should be kept and retained until the license is terminated, after which they may be stored with other plant records.

The NSS Technical Specifications include requirements to address each of these. security methods.

13

Docket 50-238; License No. NS-1; N.S. Savannah to Response to Revised Power Reactor Security Rule MARAD's Interpretation of the Applicability of 10 CFR PART 73 to the NSS November 8, 2010 When 10 CFR 73.55 was promulgated on February 24, 1977, MARAD interpreted that 10 CFR 73.55 and 10 CFR Part 73 were not applicable to NSS. The logic was the following:

" The Technical Specifications included all necessary security requirements to effectively implement the possession-only license;.

" The possession-only license did not allow the NSS to be operated; and,

" The introductory sentence of the 1977 rule states "Each licensee who is authorized on February 24, 1977, to operate a nuclear reactor pursuant to Part 50 . ." (42FR10838).

As changes were made to 10 CFR Part 73 and 10 CFR 73.55 over the following years, MARAD similarly interpreted that if the original rule did not apply, then subsequent changes to the rule, that did not alter the applicability, did not apply.

Inspections of the NSS programs did not identify that MARAD's interpretation was incorrect. For example, Inspection Report No.: 50r238/78-1 was performed in March 1978 and noted no deficiency in security compliance. Recall that 10 CFR 73.55 required each licensee to."implement his [security] plan and comply with all provisions of this section as soon as practical after NRR approval of his plan but no later than August 24, 1978." Therefore, it is reasonable to assume'that every NRC Inspector was keenly aware of the new security requirements for operating reactors and would have strongly admonished a licensee who was taking no action to implement these new security requirements. Instead, the inspection report noted "No items of noncompliance or deviations in this area [Ship Surveillance] were identified by the inspector." Through the years, subsequent inspection reports contained similar statements. The most recent inspection report is similar. In Inspection Report 05000238/2008001 (November 2008), the inspector rioted the security programs were in compliance with the Technical Specification requirements.

MARAD clearly understands that inspection activity and inspection reports do not revise the NSS current licensing basis or tacitly approve any licensee's failure to implement a requirement. However, when MARAD has received many reports that the NSS security program is acceptable, it is reasonable that MARAD became confident that their interpretation of the applicability of 10 CFR Part 73 was correct and they were meeting NRC expectations regarding NSS security.

Similarly, the NSS License has never contained a requirement regarding security. When the license was reissued in its entirety in License Amendment 9, MARAD did not propose and NRC did not add a license condition regarding security. The amendment was approved in August 1981. This is another example that gave MARAD confidence they were meeting NRC's security expectations.

The 10 CFR Part 73 rule was most recently revised on May 26, 2009 with compliance required by March 31, 2010. In its Statements of Consideration, the NRC clearly stated when the rule applies. However, there was no similar statement defining when the rule no longer applies. Specifically, the May 2009 rulemaking states that receipt of the special nuclear material triggers the implementation of the physical security program. At.74FR13936, Section 73.55(a)(4) establishes when an applicant's physical protection program must be implemented. The Commission concluded that the receipt of special nuclear material in the form of fuel assemblies onsite, i.e. in the licensee's protected area, is the event that subjects a licensee to the requirements of Sec. 73.55. It is the responsibility of the applicant/licensee to implement an effective physical protection program before special nuclear material in the form of fuel assemblies is received in the protected area.

Section 73.55(a)(4) states:

14

Docket 50-238; License No. NS-1; N.S. Savannah to Response to Revised Power Reactor Security Rule MARAD's Interpretation of the Applicability of 10 CFR PART 73 to the NSS November 8, 2010 Applicants for an operating license under the provisions of part 50 of this chapter or holders of a combined license under the provisions of part 52 of this chapter, shall implement the requirements of this section before fuel is allowed onsite (protected area).

Therefore, it appeared logical to MARAD that, if a licensee had no special nuclear material on site when the 10 CFR Part 73 was promulgated, the licensee did not fall within the scope of the rule. MARAD used this logic to determine that the revised 10 CFR Part 73 requirements were never applicable to the NSS. In addition, as previously stated, MARAD also used the rationale that if the original rule did not apply, then subsequent changes to the rule, that did not alter the rule's applicability, did not apply.

15

OWb SAVANNAH Technical Staff 1200 New Jersey Ave., SE U.S. Department of Office of Ship Disposal Washington, DC 20590 Transportation Maritime Administration Docket No. 50-238; License No. NS-1; N.S. SAVANNAH to Response to Revised Power Reactor Security Rule LIST OF REGULATORY COMMITMENTS The following table identifies those actions committed to by MARAD in this document. Any other statements in this submittal are provided for information purposes and are not considered to be regulatory commitments. Please direct questions regarding these commitments to Erhard Koehler (202) 366-2631, and/or erhard.koehler(dot.gov.

TYPE (Check One)

REGULATORY COMMITMENT One Time Continuing DUE DATE Action Action None. ElI Not Applicable 16